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Modifications and your Insurance

A couple of weeks ago I called my insurance broker with a couple of questions concerning modifications to cars. My first question was about "After Market" performance enhancing parts and what affect they had on ones coverage. My second question was how the insurance companies are handling the same performance enhancing parts provided and installed by the dealership. And this was her response:

I have gone through each of our carriers (insurance companies) to determine how each defines a "modification" and have typed a few below . . .

Royal & Sunalliance:It includes changes, other than repairs or restorations that affect the original manufacturer's design specifications or increase the value of the automobile. These may include, but are not limited to engine modifications, paint changes, non-factory installed wheels, tire and electronic accessories and equipment, etc.

ING:Requires approval from the underwriter before binding coverage. Modification for enhanced speed or racing will not be written. "A modified customized or altered vehicle is one which has been changed so it is (or attempts to be) one of a kind. The changes would increase the cost to repair or replace the vehicle over a factory produced model."

Economical:"Vehicles that are modified from the manufactured specifications that will enhance the vehicle's performance (e.g. use of nitrous oxide, engine modifications that increase the vehicle manufacturers horsepower rating, performance enhancing exhaust systems)"

What I have determined after speaking with some underwriters is that the owner of a vehicle who is deciding to purchase modifications for their vehicle should contact their broker who in turn will speak directly to their specific underwriter. The underwriters I spoke with had no problem with the brakes that you had spoken of, but sway bars (although not a speed enhancing product) raised flags with each of the underwriters as to how the vehicle will actually be used. . . .perhaps racing. The rule of thumb the underwriters are using is that they will insure the car if the performance enhancing parts come with the car from the FACTORY. Anything done to the car after that, even by the dealership, needs to be reviewed.

The Facility Insurance Company is the safest route to go with respect to insuring a modified vehicle. In order to be insured through Facility Insurance one must be denied insurance through another carrier. The owner of the vehicle would have to submit an appraisal in order that the vehicle be rated with respect to the value of the vehicle rather than the rate groups of that year, make & model.

I speak from experience when I tell you that one of my insureds had a "performance enhancing parts" applied over his stock vehicle. Thankfully, he was insured through the Facility (due to being a high risk driver) when he had an accident. If he had been insured through a regular market carrier, the insurance company could have denied paying the claim as he had not notified me about the "parts". In the end, he did lose out because the company paid for the vehicle based on the year, make and model of the vehicle . . .which did not cover the cost for the modifications made to the vehicle. I felt badly for the kid, as he was "told" by a friend that all he needed to do was just "keep his bills" in the event of an accident.

I don't know how much help I've been, but it seems pretty standard with all the companies that we represent that modified vehicles are not eligible for coverage through a regular market.

So there you have it boys and girls. While some of this is clear there is much more that isn't. The Insurance companies will always view performance enhancing after market modifications with some degree fear. In the end if you want to be certain that you haven't affected your insurance you shoule check with your insurance company.

Re: Modifications and your Insurance

I remember there was a case with my friend that he modded his WRX way too much and when he got into an accident (he got t-boned). The insurance company denied his claim and he never got any money back , reason being his car was highly modified and did not report anything to the insurance company.

Re: Modifications and your Insurance

I'm sure there are plenty of stories like that. It's all about the risk you are prepared to take when you modify the car. And this type of behavior does not give the insurance companies a good picture of "tunners."

Originally Posted by 3GFX

Excellent info, I vote for a sticky. (Moved Skarbro's thread here as well)

Re: Modifications and your Insurance

Here in bc, you have to submit receipts after the car has been written off. They will grant some percentage of total, but its way too low and seems that its easier to part it out and put stock parts back in. They will take in to consideration aftermarket wheels, they will compare it to oem price and will decide whether to pay or not-it concerns any other mods (exhaust etc ) Most of the times oem parts cost way too much and thats how they will figure whether to pay additional or not.

Re: Modifications and your Insurance

Thanks for the advice. I work in auto claims myself so I'm not too familiar with underwriting. Does anyone know if tint should be reported to the insurance company? I am not really worried about its added value.